Putting affordability at the heart of how we set rents in Wales

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This means alleviating the worst excesses of the housing crisis by building more and building better.

Importantly, it also means that whatever the tenure of your home, the cost of living in it doesn’t expose you to or exacerbate poverty.

We contend that the best way to ensure that our homes are affordable for those that live in them is for rent to be set locally with tenants and partners.

We think this is the easiest, most transparent and accountable way of ensuring that the rent that is charged is done so with a full understanding of the impact across the places, homes and communities that housing associations serve.

Having this debate and making this decision locally also enables proper and full consideration of how much our homes cost to run – taking into account their energy efficiency, service charges and other significant household costs.

In Wales, we plan to do this by putting in place long term local rent policies from 2020.

We are not starting from a blank sheet of paper though.

Community Housing Cymru recently commissioned Altair to undertake a review of the methodologies, data availability and good practice around affordability in Wales.

I know that similar reviews are taking place in other parts of the UK and on a pan European level.

Our report analyses elements of different affordability models and their suitability for use in different parts of Wales, and finds that the data to support housing associations with decision making can sometimes be hard to find.

The report learns from the experience of housing associations in Wales and recommends that local rent policies should be developed with tenants and should be fair, transparent and clear.

Local rent policy should not only provide stability, but have the flexibility to respond to changing circumstances. Finally, it identifies a space for some common affordability principles and tools that support meaningful discussions with tenants locally.

We will be working with housing associations to implement these recommendations over the summer and to support the establishment of local rent policies by April 2020.

As usual, we can’t do this alone. In Wales a rent envelope is set nationally by Welsh Government and for the past few years this has taken place on an annual basis with a 12 month transitional settlement which is due to end in March 2020.

The review rightly recognised the importance of certainty, for tenants, funders and landlords when it comes to setting rent and we have welcomed their recommendation of a long term and sustainable settlement.

The certainty that a sustainable settlement nationally would provide cannot be underestimated.

It would mean housing associations can engage with their tenants knowing the overall rent envelope.

It would enable them to use what flexibilities are currently available within the current model to adjust their approach across the areas in which they operate and it will enable them to take a more strategic look at the interaction between the rents that are charged and the value for money that the association offers.

The Welsh Government, in their response to the Independent Review of Affordable Housing Supply on July 9th, now has a real opportunity to support genuine, robust and meaningful decision making between landlord and tenant about affordability, and we look forward to working together to achieve affordability for social housing tenants in Wales.